National Savings and Investments (NS&I) has begun "repaying funds" to thousands of Premium Bonds customers who were impacted by the financial institution's savings scandal.
The Government-backed bank has identified up to 34,000 estates that were not fully repaid after bereaved relatives submitted death claims to access their loved ones' savings.
According to NS&I, the total value of affected holdings stands at roughly £367million. The error stemmed from a flawed search system that failed to detect all NS&I products held by deceased customers when processing bereavement notifications.
Initial estimates from late March suggested approximately 37,500 claims worth £476million might have been impacted, though ongoing review work has since reduced these figures.
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Estates with holdings of £10 or more will receive the full value owed, adjusted upwards to compensate for the delay.
This adjustment will reflect either the interest accumulated since the error occurred or the Bank of England base rate plus one percentage point, whichever proves more favourable, following Financial Ombudsman Service guidelines.
The Treasury has granted a complete inheritance tax exemption on all returned holdings for those caught up in the tracing error.
Personal representatives and executors will also benefit from income tax relief, meaning they will not face liability for tax ordinarily due on interest that accrued before the customer's death or during estate administration.
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Have you won on Premium Bonds? | GETTYThe processing fault has now been rectified for both existing and future bereavement claims, with strengthened procedures implemented to prevent any recurrence.
NS&I introduced a more thorough verification system in January 2026, though this enhanced approach requires additional time and has created backlogs for current claimants.
The organisation has apologised to those experiencing these delays and recruited an extra 100 employees to address the workload.
NS&I expects to restore normal processing times by autumn 2026 and is examining further ways to enhance its bereavement service.
The £10 threshold for contact was deliberately set lower than typical redress schemes, prioritising the return of funds whilst avoiding excessive administrative burden for minimal holdings.
Sir Jim Harra, NS&I's Interim Chief Executive, offered an apology to those affected: "I apologise to everyone who has been affected by this issue. Beginning the process of repaying these funds is a key step in putting things right."
He added: "We need to ensure that everybody who makes a bereavement claim with NS&I is treated sympathetically and has their case processed as quickly as possible. Today, this process is taking longer than it should. We have brought in additional staff to get the service back on track."
Families and beneficiaries need not take any action, as NS&I will contact executors directly. Payments are expected to be completed by the first half of 2027.